It is the time of year to review our financial health and think about how we can improve our situation. As we reflect on our behavior to determine whether we were “naughty or nice,” we will likely identify a few areas that need attention. Unfortunately, almost half of American adults make one or more New Year’s resolutions annually — and then fail to achieve them. Here’s how to make New Year’s resolutions last the whole year and beyond.
Identify Areas that Need Improvement
First, identify the one to two major issues that are impeding your financial progress and commit to the one that you are most motivated to improve. Spend some quality time either journaling about this issue or discussing it with a friend or loved one. Most importantly, focus on how you will feel and how much better your life will be if you achieve your goal. Studies show that if we can visualize our success, or conversely, how our lives will be affected if we fail, we will be more intentional about changing our behavior.
Share your goal with others and choose an accountability partner. If you are vocal about your goal you are less likely to break your commitment to that goal. Making a firm declaration to improve this aspect of your finances will show others you are serious. They will then tend to follow up with you and ask about your progress. This will help you stay focused on your goal. The more you discuss this endeavor, the more “top of mind” it will be.
A huge key to success is choosing a coach or accountability partner to keep things real. An accountability partner can periodically check on your progress and motivate you to maintain your momentum. They can also remind you of your vision of success or reinforce the consequences of inaction.
Make your resolutions specific as possible and achievable. The best way to achieve your ultimate goal is to break it into smaller, easily achievable increments. For example, I may want to save $5,000 for a trip. I can set a monthly goal of $600/month for savings but that sounds too overwhelming. Starting with a more realistic goal of $200 a month and then ramping that up from there may be an easier way to start.
Now that you have identified your goal for next year, communicated it to others and broken it down into smaller steps, it is time to make it happen. This is where most of us lose momentum.
How to Turn Your Resolution into Reality
Once again, it is essential that you write down your goal and put it in an area you can see frequently. Perhaps you can send yourself a weekly or daily computer-generated reminder. A continuous reminder system with specific action steps will go a long way to keeping you on track. Back to my example of saving for a trip, I may want to put a picture of where I want to travel on my desktop for inspiration and sign up for a budgeting tool like mint.com so that I can monitor my spending in real time. These constant reminders and feedback tools will help me measure my progress.
As you save the money sweep it into a separate account specifically dedicated to this savings goal, you can measure progress and celebrate reaching milestones by engaging in something you enjoy. Setting short term, intermediate, and long term goals/commitments that are realistic (based on past behavior), yet progressively more challenging, will help you maintain momentum. As we recognize that are efforts are working we naturally are motivated to ramp up the intensity of the effort. For example, If I reach my monthly goal of $200 savings, I can reward myself by watching a movie or better yet, not allow myself to watch my favorite TV show, unless I reach my weekly savings goal.
To summarize, here are the tips to creating success with your New Year’s Financial Resolution:
- Make your resolutions specific as possible and achievable. Break it into smaller increments.
- Share your goal with others and choose an accountability partner.
- Keep your goal in an area you can see frequently—make it visual.
- Create a to-do list to achieve your goal and schedule it on your calendar- use daily reminders via computer.
- Set short term, intermediate, and long term goals/commitments that are realistic (based on past behavior), yet progressively more challenging.
- Monitor your progress, reward yourself for success and or punish yourself for not achieving your goals.
